If you’ve tried to buy a home in the Boise real estate market recently, you’ve probably discovered the challenges of multiple offer situations.
With our low listing inventory and strong demand, I’m seeing multiple offer bidding wars on listings in most areas of our real estate market.
Like most other Realtors®, I’ve recently (like last week!) worked with buyers who were outbid in multiple offer situations.
If you’re a buyer, here are a few tips on how to make your offer stand out vs. the competition.
Pre-Approved Financing
Pre-approved financing isn’t optional.
You must be able to prove that your financing is pre-approved if you want to have your offer seriously considered.
Work with a local direct lender who underwrites your pre-approval.
Avoid working with lenders who do nothing more than issue a weak pre-qual letter with a long list of conditions.
Earnest Money
Earnest money matters despite being of somewhat questionable value.
Sellers are often impressed with large earnest money amounts.
You’re probably going to need those funds to close anyway, so why not offer more earnest money to help secure an accepted offer?
Obviously, offers with little or no earnest money will usually be rejected by a seller.
Closing Date
Your offer will have a better chance of acceptance if you tailor it to the seller’s needs.
Try to determine when the seller wants to close, then craft your offer to meet the seller’s wishes.
If the property is vacant and the seller is continuing to make loan payments, a fast closing will be attractive to the seller.
Conversely, if the seller is having a home built that won’t be completed for another 60 days, a 60-day closing will likely succeed.
Contingencies
Contingencies are deal-killers in multiple offer situations.
An offer that’s contingent upon selling another property is a non-starter in a multiple offer situation.
An offer that’s contingent upon closing an existing escrow is slightly better, but you will need to provide proof that the deal is solid along with your offer.
That means the underlying transaction should have firm loan approval, an appraisal, and have no remaining unresolved inspection issues.
Personal Property
Avoid asking for personal property that isn’t offered in the listing.
Asking a seller to leave their refrigerator, washer, or dryer could require them to replace those appliances if they intend to keep them.
Asking for personal items can also offend/annoy the seller and cause you to lose out to another offer.
Inspections
You have the right to have the property you’re buying inspected.
In our current hot Boise real estate market, some buyers are waiving their inspection rights to make their offer more attractive.
I do NOT recommend this!
Escalation Clauses
Escalation clauses are also appearing in the Boise real estate market.
An escalation clause essentially says that the buyer will outbid any other offer; often including a maximum price the buyer will pay.
I know of one recent situation where a $249,900 listing sold for $272,000 with 16 offers, all cash, no appraisal, inspections waived, and an escalation clause.
I do NOT recommend that you engage in this silliness.
Contrived Multiple Offer Situations
Some listing agents, and their sellers, have become adept at delaying responses to offers while they hold open houses in an attempt to generate multiple offers.
This can sound very attractive to a seller who wants to take advantage of eager buyers in our hot market.
I’m seeing many listings these days stating that the sellers will be unable to respond to offers until (insert date here).
Everyone has cell phones, e-mail, and text capabilities these days.
It’s a bit of a stretch to believe that a listing agent can’t reach a seller and get a response to your offer quickly.
If you’re told that the seller won’t respond to your offer in a reasonable time, and the home is being held open in the meantime to generate competing offers, you should carefully consider if you want to play this game.
Do you really want to do business with a seller and listing agent who conduct themselves this way when you’re making a good-faith offer to buy the home?
My Advice
Sometimes, the best thing you can do in a multiple offer situation is to walk away and not participate.
Despite our lack of listing inventory, there will always be another house.
Don’t let yourself get caught up in a bidding frenzy!
_______________________________________________________
Phil Hoover is a licensed independent Idaho real estate broker, assisting both buyers and sellers in Boise Idaho, Meridian Idaho, and Eagle Idaho.
During his 45 years of full-time real estate experience, Phil has helped thousands of past clients buy and sell quality properties in the Western U.S.
Phil is one of only ten local Realtors® (of nearly 5,500) honored with the coveted “Realtor® Emeritus” award from the National Association of Realtors®, recognizing 40 years in real estate.